Atul Ltd 2019-20

Corporate Overview Statutory Reports Financial Statements 182 Atul Ltd | Annual Report 2019-20 01-21 22-91 92-228 Estimation of uncertainties relating to the global health pandemic COVID-19 The plants of the Group in India were closed on March 24, 2020 following countrywide lockdown due to COVID-19. The Group has since obtained required permissions and restarted its manufacturing facilities in the second fortnight of April 2020. Based on the immediate assessment of the impact of COVID-19 on the operations of the Group and ongoing discussions with customers, vendors and service providers, the Group is positive of serving customer orders and obtaining regular supply of raw materials and logistics services after resumption of the operations. The Group has considered the possible effects that may result from the pandemic relating to COVID-19 on the carrying amounts of trade receivables and inventories. In assessing recoverability of trade receivables, the Group has considered subsequent recoveries, past trends, credit risk profiles of customers based on their industry, macroeconomic forecasts and internal and external information available up to the date of issuance of these Consolidated Financial Statements. In assessing recoverability of inventories, the Group has considered the latest selling prices, customer orders on hand and margins. Based on the above assessment, the Group is of the view that carrying amounts of trade receivables and inventories are expected to be realisable. The impact of COVID-19 may be different from than estimated as at the date of approval of these Consolidated Financial Statements and the Group will continue to closely monitor the developments. Critical estimates and judgements Preparation of the Consolidated Financial Statements requires the use of accounting estimates, judgements and assumptions, which, by definition, will seldom equal the actual results. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the Consolidated Financial Statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the Consolidated Financial Statements. This note provides an overview of the areas that involves a higher degree of judgement or complexity and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the Consolidated Financial Statements. The areas involving critical estimates or judgements are: i) Estimation for income tax: Note 1 (e) ii) Estimation of useful life of tangible assets: Note 1 (i) iii) Estimated goodwill impairment: Note 1 (j) iv) Estimation of provision for inventories: Note 1 (q) v) Allowance for credit losses on trade receivables: Note 1 (r) vi) Estimation of claims | liabilities: Note 1 (y) vii) Estimation of defined benefit obligations: Note 1 (z) viii) Consolidation decisions and classification of joint arrangements: Note 1 (b) and Note 29.14